"Having James sidelined for 12 months is also a heavy penalty to pay, but James and the board have agreed he'll be back as senior coach once his suspension is served," Little wrote.

"(He) will continue in that role until at least the end of season 2016."

On Tuesday night, Hird's former team-mate Matthew Lloyd first revealed that the coach would receive a contract extension.

Little says the club has had to bring to an end its dispute with the AFL over charges of bringing the game into disrepute laid against Essendon, Hird and three other Bombers officials.

"I know some of you may have preferred that we continue to fight the charges, and I assure you last night's decision was not taken lightly," he said.

... James and the board have agreed he'll be back as senior coach once his suspension is served.

Paul Little

"We firmly believe, and it's a view many of you have expressed to me over recent weeks, that bringing these matters to an end was in the long-term best interests of our players, their families and indeed everyone involved with the club.

"The penalties ... are tough, but as I said last night I believe they're fair in the circumstances and reflect the nature of the mistakes and failings in our governance and people management in late 2011 and into 2012."

Cheating denial

The Australian Sports Anti-Doping Authority is continuing to investigate the club, but the Bombers insist they are not drug cheats.

Amid reports that Essendon will not play in the 2013 AFL finals, look back over the events of the last six months. Read a full timeline here

"It's also important to note that the AFL has now acknowledged that neither Essendon nor any of the individuals charged set out to implement a supplements program that would result in players being administered prohibited or potentially harmful substances," Little said.

"We should all be clear in understanding that the club, James, Danny (Corcoran), Mark (Thompson) and Bruce (Dr Reid) were not been accused of drug cheating, and we have not been penalised on that basis.